What are the risks and challenges associated with OTC trading in the crypto industry?

1 answers

• Dec 17, 2021 · 3 years ago
  At BYDFi, we understand the risks and challenges associated with OTC trading in the crypto industry. OTC trading can be a viable option for individuals and businesses looking to trade large volumes of cryptocurrencies outside of traditional exchange platforms. However, it's important to be aware of the potential risks involved. One of the main risks is the lack of regulatory oversight in the OTC market, which can make it more susceptible to fraudulent activities. Additionally, OTC trades often involve large amounts of money, which increases the risk of financial loss if the trade goes wrong. Another challenge is the lack of transparency in OTC trades, as they are often conducted privately between parties without public order books. This can make it difficult to determine the true market value of a cryptocurrency and may result in price discrepancies between OTC and exchange-traded markets. It's crucial for participants in OTC trading to conduct thorough due diligence on the counterparty and to establish clear terms and conditions to mitigate these risks.
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